How Schneider Electric is adopting autonomous supply chain planning with Kinaxis
Schneider Electric has one of the most complex supply chains in the world and is working towards personalized supply chain management for its customers.
Schneider Electric is a French multinational company specializing in energy and automation digital solutions for efficiency and sustainability for homes, buildings, data centers, infrastructure and industries. Of its 135,000 employees, over 80,000 work in supply chain - which gives you an idea of the scale and complexity of the organization's global supply chain network.
In terms of numbers, Schneider is delivering 150,000 order lines per day and is managing a catalogue of close to 200,000-300,000 references. Beyond the numbers, these references can include everything from a small product, like plugs and sockets, to circuit breakers that take up the size of a room. It also has 91 distribution centers and 183 factories globally, with over 14,000 suppliers in total.
The past 18 months or so have highlighted how fragile supply chains can be and companies are waking up to the fact that if they want to continue to serve their customers effectively, they need to move beyond a basic understanding of all the moving parts. Schneider is taking this challenge head on and has implemented an autonomous planning program, which aims to deliver personalized supply chain management to its customers. Or as the company describes it, being ‘digitally connected to delight the customer'.
Olivier Redon, Global Sales, Inventory and Operation Planning VP at Schneider Electric, was speaking at this week's Kinaxis Big Ideas in Supply Chain Event, where, commenting on the company's supply chain, he said:
That's a vast network. That's a global network. And you need to orchestrate it. The last nine years we have been building a partnership with Kinaxis and today we are managing our tactical plan with Kinaxis RapidReponse.
We need to have a world-class leading supply chain. We are obsessed with continuous improvement - to delight our customers.
We want to have a truly personalized supply chain for our customers, so we need to truly understand their buying behaviour and adjust the way that we deliver, to delight them. We want significant breakthroughs, with customer centricity, to have cash efficiency and improve productivity.
Striving for continuous improvement
The Schneider story is a complex one and too much to cover here succinctly, but Redon's video is worth watching in full and can be viewed on the Kinax Big Ideas in Supply Chain event page on demand.
But key to Redon's argument is that the disruption seen over the past 18 months, during the COVID-19 pandemic, has highlighted that organizations cannot rely on the past to dictate the future. Companies need to get themselves into a position where supply chain decisions are dictated by real-time data analytics and scenario planning, and buyers and suppliers have a view of what is achievable ‘now'. Redon said:
With all the surprises that we've had, we can no longer say the past will be the future. So what you need to do is anticipate, while being forward looking. What you need to deploy is demand-sensing, market knowledge, and supply sensing in order to integrate all these elements to be forward looking instead of taking the past as a reference.
Schneider has a number of key objectives when thinking about its supply chain. These include:
Sustainability, focusing on CO2 reduction and creating a circular economy
Moving from tailored to trusted, delivering to customers based on their buying behaviour
Be ‘business model ready', so that when markets change, it can respond quickly
To be more resilient. Cyber-security is front of mind and if a major event occurs that needs to be managed, the customer does not see anything
Move from ‘connected' to ‘intelligent', so it has insight into demand sensing, it has end-to-end orchestration, it is automated and autonomous
More velocity and efficiencies - leveraging the company's regional setup, so that it can act fast, and develop critical relationships with both suppliers and customers
With these objectives front of mind, central to Schneider's ambitions is its autonomous planning program. Redon said:
What we want to achieve, to create, is self-healing, autonomous supply chain planning. We want to be fast and connected. We are already connected inside Schneider - that is not enough. What has happened in the last 18 months in terms of supply chain disruption, about transportation, about plastic, about electronics - we need to connect our upstream. And this is what we did.
We are connected intra-group. 100% of our transactional business is connected - distribution and manufacturing. Next year we are going to do a proof of concept on, should we connect our project and systems supply chain? Before this, we prioritized connecting our suppliers.
The disruption that we've seen, you need to be connected with suppliers. Now 90% of our electronic spend is connected in Kinaxis up to a tertiary supplier. We are capable now to give a fully consolidated long-term view, and we are capable of giving a commitment on the demand. And then on the allocation, based on the quantities that we have, we are able to see what would be the impact in terms of business end-to-end.
We have full visibility on the distributors' stock at reference level. We can integrate this insight into all development planning and consider the full demand chain.
Redon said that the days of doing demand planning, then inventory planning, a capacity check, propagating a signal to suppliers and then trying to do reconciliation are over. He adds:
What we need to do now, which we have, is one plan in our system with Kinaxis. And when an event is happening, you can plug your event anytime, anywhere, on demand on the upstream. Here you gain a lot of agility in order to react when the event is happening and not based on the cycle that you are driving.
In addition to the above, central to autonomous supply chains are analytics and scenario planning. Redon explains:
[Another] key pillar is being powered by analytics. And, again, we do not want to be past-looking; we want to be forward looking. We want to be able to sense detect using outside-in data. We did a lot on the demand sensing. We did a lot on the supply sensing.
The true focus of value added planning is to do what-if scenarios. That is a key enabler, but is more about change management that you need to drive with your planning. You can't be organized anymore by location, you need to be organized by an end-to-end network planner that is capable of doing some business route to define the scenario. And being able to publish it and share it with the business.
Once you have the scenario, you need to run the scenario. And it needs to be hard-wired into the business. Meaning that this scenario is not a planning scenario, it's a company scenario where you are going to focus on profitable growth. Not on forecast accuracy, but profitable growth. What that means is that we simplified our SIOP process - we moved from more than 100 SIOPs to 20 SIOPs, which are fully integrated with the business.
For more diginomica stories from Big Ideas in Supply Chain Fall Event 2021 visit our Big Ideas in Supply Chain Fall 21 event hub. The virtual event ran from October 5-6th and sessions are now available to view on-demand until further notice. Click here to register and view now.